Despite economic crisis, Phnom Penh's port authority says it needs a soft loan from South Korea to handle more cargo through the capital
Photo by: TRACEY SHELTON
Shipping containers at the Phnom Penh Port. Authorities say a $30 million loan is needed for expansion to allow the capital to meet growing freight demand.
THE Cambodia-South Korean Friendship Association is seeking a US$30-million soft loan from the South Korean government to build a new terminal for the Phnom Penh Port in the lower Mekong, according to Hei Bavy, chairman and CEO of the Phnom Penh Autonomous Port.
The port expansion is planned on 12 hectares of land between Phnom Penh and Neak Leung, but a site has not yet been selected.
"We hope that the loan will be approved; if is it not approved, our project will be delayed," said Hei Bavy.
A delegation to South Korea left on Tuesday and returned on Saturday.
"If the loan is approved, we will build the terminal by 2010," he said.
"If they don't give it to us, we will ask the Ministry of Finance to find a private company to do a BOT [build-operate-transfer]," he said.
He said that the expansion is needed to meet growing demand for goods in Phnom Penh and to help the port to remain competitive with regional counterparts.
Businesses have complained of limited capacity and slow turnaround time at Cambodia's ports.
They say that expanding the port and modernising its equipment are critical to improving the country's investment climate.
"We can't keep our port going without upgrading; we can't wear the same cloth all the time," Hei Bavy said.
"We need a proper container yard. We need new and modern cranes," he said.
We need a proper container yard.... we need new and modern cranes.
He said that Cambodia's garment industry would benefit from an expanded port through lower logistics costs as most garment exports are done by ship. A modernised port would also reduce the need for overland transport, he said.
The expansion plans would also include an equipment upgrade.
The port's existing crane can make 10 moves per hour, compared with regional competitors that are capable of 25 moves per hour.
So Ngoun, president of So Nguon Dry Port and co-chairman of the Government-Private Working Group on Transportation, said that an upgrade will reduce the need for overland trade and cut transport costs.
Mong Reththy, president of Mong Reththy Group who also owns a private port in Preah Sihanouk province, said he welcomes any new port development.
"Good ports are needed, especially deep-water ports," he said.
The proposed expansion comes amidst tough times for the global shipping industry.
The port of Singapore - the region's largest - reported a 19.8 percent drop in February from the previous year, according to the shipping newswire Portworld.
The service also reported that falling shipping demand is forcing India to delay nationwide port expansion plans.
Cambodia's ports have reported steep drops in throughput, with the Phnom Penh Autonomous Port reporting a decline of 30 percent in the first three months of 2009 compared with the same period last year.
The port earned US$5 million in 2009 with throughput of about 50,000 twenty-foot equivalent units (TEUs), a rough measure of cargo capacity.
But local observers said the project should go ahead, despite the economic slowdown that is seeing Cambodia's exports fall.
"The demand for goods will definitely increase ... we should not let the economic crisis stop this plan - the crisis is just temporary," Hei Bavy said.
"The current Phnom Penh Port is located on a 6-hectare site, capable of storing 60,000 TEUs.
"The new 12-hectare site would have five times more capacity. We plan to build the port to international standards," he said.
Construction would start in 2010 and finish by 2012, and the port would start operation in 2013, he added.
"We cannot delay until 2015, and the global financial crisis will not stop the plans for port development," he said.